A successful biomaterial–neural tissue interface should demonstrate biocompatibility, cytocompatibility, the ability to integrate properly within neural tissues, and the prolonged maintenance of desired electrical properties. Neural electrodes implanted in vivo often experience degradation of these properties due to implant micromotion, mechanical mismatch, an extensive foreign‐body response, and the formation of glial scar tissue that interfere with signal transmission. However, recent advances in nanotechnology and nanomaterials show great promise to address these problems due to their biologically inspired surface features and enhanced electrical properties. This review will discuss how nanomaterials and nanotechnology are being used to fabricate advanced neural electrodes that demonstrate greater bio‐integration properties, enhanced prolonged electrical properties, and an improved signal specificity down to the single molecule range. First, an overview of current biomaterial–neural tissue interface technology is provided, followed by an examination of conventional and newly developed micro‐ and nano‐fabrication methodologies. Nanomaterials that have shown the most promise for neural interfacial applications are then discussed, including carbon nanomaterials, conductive polymers, and hybrid nanomaterials. The purpose of this review is to describe recent advances in nanotechnology for improved biomaterial–neural tissue interfaces, and identify their advantages and disadvantages from a researcher's perspective.